Alaska Air Cuts Profit Outlook As Fuel Costs Jump And IT Outage Hits

Core Insights - Alaska Air Group Inc. expects third-quarter adjusted earnings per share to be at the low end of its previous forecast of $1.00 to $1.40 due to higher fuel prices and operational challenges [1] Financial Performance - The airline's expected fuel cost has risen to $2.50 to $2.55 per gallon, up from an earlier estimate of about $2.45, influenced by refinery disruptions on the West Coast [2] - Operational issues, including weather, air traffic control delays, and a July IT outage, have increased expenses, with the outage alone expected to reduce earnings by approximately 10 cents per share [2] - For fiscal 2025, Alaska Air anticipates adjusted earnings of over $3.25 per share, which is below analyst estimates of $3.81 [5] Revenue and Demand - Revenue trends remain solid, with unit revenue tracking near the high end of guidance and positive yield growth observed in August [3] - Demand for premium seating and a significant rebound in corporate travel since the second quarter have helped mitigate the impact of rising costs [3] Loyalty Program and Market Position - The launch of the Atmos Rewards loyalty program in August has resulted in record media impressions, and the new Atmos Rewards Summit Visa Infinite Card exceeded year-end enrollment targets within two weeks [4] - Industry analysts note that low-cost carriers are facing increasing pressure as larger competitors capture a greater share of post-pandemic demand, highlighting the challenges for low-cost airlines in managing volatile expenses [5] Stock Performance - Alaska Air's shares are currently trading lower by 1.81% at $62.22 [6]